GM and Chrysler Submit Updated Restructuring Plans; Up to $18.6B More Needed; Outlines for Product Plans 18 February 2009 As required by the loan agreements signed in December 2008, GM and Chrysler submitted their updated restructuring plans showing a pathway to achieve financial viability to Congress on Tuesday. The plans, updated in the context of a worsening sales outlook for the entire auto industry, outline a need for up to an additional$16.6 billion in Federal support for GM and $2 billion for Chrysler; deeper job and brand cuts; as well as product plans for the surviving versions of the automakers. GM. Following the steep decline in US industry sales in December 2008 and January 2009, GM responded by further lowering its forecast for 2009 US industry sales to 10.5 million units (57.5 million units globally) for viability planning purposes. These industry planning volumes are more conservative than those being used by most other industry sources. In the US, GM will focus on its core brands; Chevrolet, Cadillac, Buick and GMC. Pontiac will serve as a focused brand with fewer entries, within the Buick-Pontiac-GMC channel. GM will have a total of 36 nameplates in 2012, down 25% from 2008 levels. Elements of the new plan include: • GM will sell or phase out the Hummer brand by 31 March, with a final resolution no later than 2010. • GM has offered Saab for sale, and is requesting Swedish government support prior to any sale. GM has developed a specific proposal that would have the effect of capping its financial support, with Saab’s operations effectively becoming an independent business entity 1 Jan 2010. While GM hopes to reach agreement with the Swedish government, the Saab Automobile AB subsidiary could file for reorganization as early as this month. • Saturn will remain in operation for the next several years, through the end of the planned lifecycle for all Saturn products. In the interim, if Saturn retailers or other investors present a plan that would allow a spin-off or sale of Saturn Distribution Corporation, GM would be open to any such possibility. If a spin-off or sale does not occur, GM plans to phase out the Saturn brand at the end of the current product lifecycle. • GM’s dealer count is also projected to be further reduced, from 6,246 in 2008 to 4,700 by 2012, and to 4,100 by 2014. Most of this reduction will take place in metro and suburban markets where dealership overcapacity is most prevalent. • GM will eliminate 47,000 jobs—37,000 hourly and 10,000 salaried—globally, including 20,000 workers in the US. In its earlier submission, GM said it would cut up to 31,000 jobs. • Five additional plant closings in North America, bringing the total to 14 plant closures within the next three years. • Outside of the US, GM has accelerated restructuring plans for its Canadian, European and Asia-Pacific operations, all of which will be funded from sources outside the US. In Europe, in addition to working with its labor partners to achieve$1.2 billion in cost reductions, GM is also in discussions with the German government for operating and balance sheet support.

GM product plans. In 2005, GM completed a long-term initiative to transform operations from a collection of semi-autonomous regions into a cohesive global enterprise. GM now manages all product development activities globally.

By 2012, more than 50% of GM’s US passenger car sales will be derived from new, global architectures, and this increases to nearly 90% by 2014. GM’s product plans, as outlined under the updated restructuring plan, sees ongoing enhancements in hybrid and electric vehicle technology, as well as potential natural gas applications, with third generation hybrid systems, lean combustion/ HCCI gasoline engines and fuel cells appearing in 2015.

 GM Fuel Economy plans. Click to enlarge.

Chrysler. Chrysler outlined three alternatives in its plan: a “stand alone” option that would require an additional $5 billion ($3 billion of which already requested but not yet granted) in Federal funding plus DOE funding of $6 billion; a strategic partnership/consolidation option (i.e.., the Fiat plan, earlier post); and the “orderly wind down”—filing for Chapter 11 as the first step in an orderly wind down. Chrysler is pushing for the strategic partnership with Fiat. Chrysler product plans. In the proposed alliance with Fiat, Chrysler would gain access to Fiat Group vehicle platforms that would complement Chrysler’s current product portfolio and would accelerate the company’s plans for the introduction of more environmentally friendly vehicles. Chrysler and Fiat portfolio ranges overlap only in midsize segments; access to Fiat’s small platform technology, small gasoline and diesel engines and light duty dual clutch transmission would eliminate need for Chrysler to develop or purchase similar components. Chrysler said that it plans on launching additional small, fuel-efficient vehicles as well as a breakthrough family of all-electric and range-extended electric vehicles. Specifically addressing the potential granting of the waiver to California and other states to enforce the AB 1493 greenhouse gas regulations, Chrysler said that it will try its best to comply to those standards using available technology, but that as a last resort it might restrict sales of certain vehicle models in those states. The difficulty in compliance would be in the passenger car segment, rather than the light-duty truck segment. Chrysler also said that it would have a product portfolio to meed the California ZEV mandate, and outlined an aggressive vehicle electrification plan that shows six ENVI electric drive vehicles being introduced through 2014, in addition to a second-generation Dodge Ram hybrid. Resources Comments Did a US founding father say, "Never a borrower nor a lender be"? As per usual, GMNAs priorities are all wrong. Hummer, Saab and Saturn are not #s 1&2&3. GMNAs lame, uncompetetive product mix, too many dealers selling said mix, and too many plants, employees making them are THE #1,2 and 3. Add #4, pension and healthcare costs, and now we start seeing where the 10s of billions that matter are. The "E85 Roll-out" needs to fall off the plan completely. As cars continue to get better mileage, gasoline will become more of a worldwide surplus than it already is. This will put price pressure on Ethanol, making it even more uncompetetive. There is no point to trading high-value, high BTU diesel for low-value ethanol. "New" four cylinder engines not till 2012??? WTF. No mention of small diesel CIs (2015 wont cut it), that virtually every other manufacturer will be bringing. Do they really think they have that much time? Good luck to them It will be a hard time to learn to be a the 2nd or 3rd player and no longer the number one... in the same time relieved from the stress of being the "yellow Jersey" they will be able to start to think : quality, efficiency, perceived value, sexy design, the bigger the better is no longer the trend but rather: small is beautiful. By the way I don't see weight reduction and drag reduction as part of their technology road map plan. The new class E mercedes as a Cd of 0.24 time to catch up Luck has nothing to do with it. Smart people make their own luck. Sounds like just more talk to me. Talk is cheap. Right. Luck better not be a big part of their plans because it's mostly gone and what's left is bad. Smart seems be rare also. And all this talk, at$19 billion a pop, isn't too cheap either.

So why is Chapter 11 not an option here? I just don't get it. The argument that no one will buy a car from a company in Chapter 11 is bogus - everyone already knows GM and Chrysler are on the rocks.

While I've generally been supportive of the Obama administration's fast action on propping up the economy, I really don't like their approach with the auto indistry. Why do the car makers get a better deal than everyone else?

GM would survive a pre-arranged Chapter 11, we could ensure the parts suppliers are kept solvent, and Chrysler might go away. No loss there. Our bankrupty laws are one of the fantastic things about the USA, let's use them.

My guess is Wagoner and Nardelli and their teams don't want Chapter 11 as it's more likely to result in their personally getting the boot. I'm frankly amazed the US has been handing out money to the banks without replacing their management. I sure wouldn't do it that way if I were a creditor.

Guess what Jim Greene; you are.

Seems to make more sense to dump GMC since their vehicles are all oversized and copies of Chevys. Saturn is more the 'tree hugger' brand; it seems like they would want to keep it and remake it.

GM needs to file for bankrupcy like any other ailing company in the US.

Chrysler? Who is that? Are they even still relevant anymore?

When I was arrested for DWI, I was jailed for messing up and paid alot in fines and court fees. I did the crime, did the time, and paid the fine.

Seems to me that GM and Chrysler was alittle tipsy with booze while managing their profitless companies to the state that they are in now. Question, lets say the two lacky companies get a bailout, what is the reprecussions for messing up in the first place? What fees and fines are these companies required to pay, even if they make any kind of profit which is a long shot?

Why is tax money granted to failing business models, when there are so many other companies that could have a good go at the automotive industry? Where's the funding for those true risk takers and entreprenuers?

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